Trump Just Hit Canada with 35% Tariffs… But Here’s Why Most Goods Are Still Safe
On August 1, 2025, the U.S. announced a massive 35% tariff on certain Canadian goods. At first glance, this sounds like the start of a full-blown trade war… but the reality is more complicated, and thankfully, less dramatic for most Canadian businesses.
Here’s a quick breakdown of what’s happening, what CUSMA has to do with it, and who should actually be worried.
💡 First, What’s a Tariff?
A tariff is basically a tax that one country charges on goods coming in from another country.
So when the U.S. slaps a 35% tariff on a Canadian product, it makes that product more expensive for American buyers, which can hurt Canadian businesses that rely on U.S. exports.
✅ Why Most Canadian Goods are Safe
Thankfully, most Canadian exports are protected under a trade agreement called CUSMA (known as USMCA in the U.S.).
CUSMA is a deal between Canada, the U.S., and Mexico that allows goods to cross borders without tariffs… as long as they’re mostly made in one of those 3 countries.
So if a product is mostly made in Canada, it qualifies and avoids tariffs.
👍 The good news is, over 90% of Canadian exports to the U.S. in May 2025 qualified for this exemption.
So for most businesses, it's business as usual.
🚨 But Some Industries Won’t Be Protected
Here’s where it gets tricky…
Some goods don’t meet CUSMA’s “rules of origin”, meaning they may not count as “Canadian enough” to avoid the new tariff.
Industries most at risk include:
Auto parts
Lumber
Steel & aluminum (these exports risk both the 50% national-security tariff and the 35% fentanyl-tariff if not CUSMA-eligible)
These sectors could see major cost increases and disruptions if the tariffs stick around.
🗓️ The 2026 Trade Deal Review Could Change Everything
Here’s the twist: CUSMA gets reviewed in July 2026.
That’s when Canada, the U.S., and Mexico will decide whether to extend the deal for another 16 years.
If even one country says “no,” the agreement doesn’t end right away… but it triggers annual reviews until it expires in 2036.
The only way to end it sooner is if one country officially withdraws with 6 months’ notice.
So yeah, this tariff drama could be just the beginning of a longer trade battle.
📩 Final Thoughts
While the headlines sound intense, the reality is more nuanced.
Thanks to CUSMA, most Canadian goods remain protected from Trump’s 35% tariff. But for key sectors like auto parts, steel, and lumber, the impact could be real, especially if trade tensions continue to escalate.
You might see: Stock prices dip in export-heavy sectors, Higher prices on some imported goods, and a stronger push to "Buy Canadian" as businesses shift focus
And with the 2026 CUSMA review on the horizon, this might just be the start of bigger changes to come.
If you’re an investor, business owner, or just someone keeping an eye on the economy, it’s worth staying informed. Trade policies shape prices, profits, and job markets.
I’ll be keeping an eye on it so you don’t have to.
Talk soon,
Finance Femster
Making financial literacy accessible, and helping Canadians make smarter, stress-free money decisions